Balanced year end position Remain within overall resources

Transcription

1 Appendix A Commercial and Investment Finance and Performance Report June SUMMARY 1.1 Finance Previous Status Amber Green Category Income and Expenditure Capital Programme Target Balanced year end position Remain within overall resources Current Status Section Ref. Amber Green INCOME AND EXPENDITURE 2.1 Overall Position To ensure financial information is presented in a consistent way to all Committees a standardised format has now been applied to the summary tables and service level budgetary control reports included in each F&PR. The same format is also applied to the Integrated Resources and Performance Report (IRPR) presented to General Purposes Committee (GPC). The data shown provides the key information required to assess the financial position of the service and provide comparison to the previous month. Directorate Actual Variance Variance % Commercial Activity -9, , % Property Services 6,086 1, % Strategic Assets -4, % Traded Services to Schools and Parents -1,200 2,676 1, % Total -8,658 3,450 3, % The service level budgetary control report for Commercial and Investment for June 2018 can be found in C&I appendix 1. Further analysis of the results can be found in C&I appendix 2. 1

2 2.2 Significant Issues Commercial and Investment At the end of June 2018, Commercial and Investment is forecast to overspend by 3.9m in.this represents an increase of 3m, due to increases in the predicted overspend for Commercial Activity and Cambridgeshire Cleaning and Catering Services, being partly mitigated by predicted underspends within County Offices budgets. Commercial Activity An overspend of 2.9m is predicted on Commercial Activity budgets in. A new pressure of 500k is reported on Housing budgets, due to the assessed value of properties at the point of transfer to This Land, which reflects progress through the planning system (and therefore market value) to date. A series of further loan advances are in progress around a site with a major re-valuation now that planning has been granted as well as construction and cashflow arrangements, although these are unlikely to fully bridge the gap to a balanced position. The company will also be concerned to borrow broadly in line with its needs. Commercial Investment budgets are expected to overspend by 2.4m in, an increase of 1.9m. The Council has considered and bid on a number of real estate / property acquisition opportunities, and was in the process of making its first investment acquisition, for 38m, as at end of July. Consideration is being given to wider opportunities and procurement of external investment advice is being progressed. A 2.4m pressure against target is considered to be the minimum nondelivery in, with the potential for this to rise, although the longer term plan to generate commercial investment income in this way remains sound. 2

3 Property Services County Offices budgets are forecast to underspend by 106k at year-end. This is due to a number of favourable variances which were first reported during the last financial year, and which mitigate other pressures within the budget: 240k surplus following a reassessment of historic business rates liabilities for children s centres. 350k saving due to the reduction in rates liability for Shire Hall, 114k of which has been applied to meet the 200k savings target set for Property Services in Business Planning. 65k saving due to The Meadows, St Ives having been vacated; this is based on the annual budget of 115k less 10k running costs and an estimate of 40k for dilapidations. There is a predicted pressure of 400k due to the expected cost of dilapidations at the C3 Cook-Chill site. There is a predicted 32k shortfall in against the planned savings from the Children s Centre Review, due to delays in vacating the premises; it is anticipated that this shortfall will be met by staff vacancies within P&C Committee. Traded Services The predicted overspend for Cambridgeshire Catering & Cleaning Service to the end of has increased by 651k to 1.1m, reflecting a predicted trading deficit of 854k combined with a 416k pressure at budget build. As the service winds down, approximately 33% of SLAs are phased to end in August 2018, with the remainder ending in October This pressure therefore represents the nondelivery of a full-year service as well as one-off costs related to closing the service. There is potential for this figure to increase as the one-off costs of closure are further refined and temporary diseconomies of scale come to fruition. 2.3 Additional Income and Grant ed this Period (De minimis reporting limit = 30,000) No new items were recorded during June A full list of additional grant income for Commercial and Investment can be found in C&I appendix Virements and Transfers to / from Reserves (including Operational Savings Reserve) (De minimis reporting limit = 30,000) The following budget virements were recorded in June to reflect changes in responsibilities that were made after the base budget was set. 3

4 transfer from C&I to Corporate Services Non material virements (+/- 30k) Notes Transfer Cleaning Contract savings to -35,878 Corporate Services - A full list of virements made in the year to date for Commercial and Investments can be found in C&I appendix 4. 4

5 3. BALANCE SHEET 3.1 Reserves The Commercial and Investment reserves contain various earmarked reserves and funds held for specific purposes, and capital reserves. The schedule of these reserves can be found in C&I appendix Capital Expenditure and Funding Commercial and Investment Committee has a capital budget of 193m in, which is funded by the following capital resources: Commercial and Investment Capital Funding ('s) Capital Receipts, 78,833 Prudential Borrowing, 112,523 Grant Funding, 1,759 Developer Contributions, 260 5

6 Variations A summary of the use of capital programme variations budget is shown below. As forecast underspends are reported, these are offset with a forecast outturn for the variation budget, leading to a balanced outturn overall up to the point when slippage exceeds this budget. Service Capital Programme Variations Variance - (June) Capital Programme Variations Used Capital Programme Variations Used Variance - (Feb) C&I Non- Housing % -16, % 0 Expenditure Commercial and Investment Committee has expenditure of 0m to date on the Capital Programme, against forecast expenditure of 193m: Commercial & Investment Capital Programme - Actual Expenditure ( m) 193 Actual Expenditure m In-year variances of 0k are predicted and a balanced position at year-end is currently forecast for. Total scheme variances of 147k underspent are expected over the lifetime of the schemes. In June Capital Programme Variations budgets were recalculated following the rephasing exercise to take account of budgets carried forward from 2017/18. The C&I Capital Programme Variations budget was adjusted by -14m to -16.7m. 6

7 Funding Commercial and Investment Committee has capital funding of 193m in. As a result of the adjustment to the Capital Programme Variations budget, the prudential borrowing requirement has reduced by 14m. A detailed explanation of the position for Commercial and Investment Committee can be found in C&I appendix PERFORMANCE 4.1 Performance data for Commercial and Investment Committee is not currently available as performance indicators have not yet been set for the committee; work to review all indicators is still ongoing. As the committee starts to undertake commercial investment, relevant indicators will be developed in conjunction with the committee and subsequently exceptions will be reported against these. 7

8 C&I APPENDIX 1 Commercial and Investment ary Control Report The variances to the end of June 2018 for Commercial and Investment are as follows: Variance (May) Actual June 2018 Variance (June) 's 's 's 's % Commercial Activity 500 Commercial Investments -5, ,400 47% 0 Housing Investment (This Land Company) -4, % 500 Commercial Activity Total -9, ,900 31% Property Services 0 Building Maintenance 1, % 0 County Offices 4, % 0 Property Services % 0 Property Compliance % 0 Property Services Total 6,086 1, % Strategic Assets 0 County Farms -4, % 0 Strategic Assets % 0 Strategic Assets Total -4, % Traded Services to Schools and Parents 0 Traded Services to Schools and Parents % 0 ICT Service (Education) % 0 Professional Development Centres % 0 Cambridgeshire Music % 0 Outdoor Education (includes Grafham Water) % 449 Cambridgeshire Catering & Cleaning Services ,415 1, % 449 Traded Services Total -1,200 2,676 1,130 94% 949 Total -8,658 3,450 3,925 45% 8

9 C&I APPENDIX 2 Commentary on Position Number of budgets measured at service level that have an adverse/positive variance greater than 2% of annual budget or 100,000, whichever is greater. Service Current 000 Variance % Commercial Investments -5,100 2,400 47% Commercial Investment budgets are expected to overspend by 2.4m in. The Council has considered and bid on a number of real estate / property acquisition opportunities, and was in the process of making its first investment acquisition, for 38m, as at end of July. Consideration is being given to wider opportunities and procurement of external investment advice is being progressed. A 2.4m pressure against target is considered to be the minimum non-delivery in, with the potential for this to rise, although the longer term plan to generate commercial investment income in this way remains sound. Housing Investment (This Land Company) -4, % A pressure of 500k is reported on Housing budgets, due to the assessed value of properties at the point of transfer to This Land, which reflects progress through the planning system (and therefore market value) to date. A series of further loan advances are in progress around a site with a major re-valuation now that planning has been granted as well as construction and cashflow arrangements, although these are unlikely to fully bridge the gap to a balanced position. The company will also be concerned to borrow broadly in line with its needs. Cambridgeshire Catering & Cleaning Services , % As previously reported, Cambridgeshire Cleaning and Catering Services is to close during, following a decision in 2017/18 based on the long term decline in prospects for the service and an increasing cost base driven by rising salaries. As the service winds down, approximately 33% of SLAs are phased to end in August 2018, with the remainder ending in October This pressure therefore represents the nondelivery of a full-year service as well as one-off costs related to closing the service. There is potential for this figure to increase as the one-off costs of closure are further refined and temporary diseconomies of scale come to fruition. County Offices 4, % County Offices budgets are forecast to underspend by 106k at year-end. This is due to the following favourable variances which were first reported during the last financial year: 9

10 Service Current 000 Variance % 240k surplus following a reassessment of historic business rates liabilities for children s centres. 350k saving due to the reduction in rates liability for Shire Hall, 114k of which has been applied to meet the 200k savings target set for Property Services in Business Planning. 65k saving due to The Meadows, St Ives having been vacated; this is based on the annual budget of 115k less 10k running costs and an estimate of 40k for dilapidations. There is a predicted 32k shortfall in against the planned savings from the Children s Centre Review, due to delays in vacating the premises; it is anticipated that this shortfall will be mitigated by staff vacancies within P&C Committee. C&I APPENDIX 3 Grant Income Analysis The table below outlines the additional grant income, which was not built into base budgets. Grant Awarding Body Expected Amount Grants as per Business Plan 783 Reported One Public Estate Cabinet Office 515 May 18 Total Grants 1,298 C&I APPENDIX 4 Virements and Reconciliation as per Business Plan -8,188 Transfer of Traded Services salary and recharge budgets to C&I Transfer of P&C ICT SLA budget to Director of Education from Head of Traded Services Transfer of ESPO dividend budget from LGSS Managed to C&I Transfer balance of Cleaning Contract saving from C&I to Corporate Services. Transfer Cleaning Contract saving from C&I to Corporate Services budgets. Current -8,658 Reported -74 May May May May June 18 10

11 C&I APPENDIX 5 Reserve Schedule 1. Commercial and Investment Reserves Equipment Reserves Fund Description Balance at 31 March 2018 Movements in Balance at 30 June 2018 '000 '000 '000 The ICT Service (Education) Other Earmarked Funds North Cambridge Academy site demolition costs Cambs Music Reserve Capital Reserves subtotal subtotal General Capital Receipts subtotal Notes TOTAL 1, ,338 Notes The reserve is committed to the replacement of essential equipment. Rental income from Bellerbys buildings on the North Cambridge Academy site is being held to offset demolition costs when the lease expires in Annual reserve agreed by GPC to develop and support the Cambridgeshire Music CREATE program which will look to create new purpose-built accommodation. Capital Receipts received during will be used to fund the capital programme at yearend. 11

12 C&I APPENDIX 6 Capital Expenditure 1. Capital Expenditure Summary Commercial & Investment Capital Programme TOTAL SCHEME Original as per BP for Actual Spend Spend - Variance Total Scheme Total Scheme Variance Scheme Commercial Activity 76,000 Commercial 76,000-76, ,000 - Investments 43,086 Housing Schemes 126, , , , , , ,493 - Property Services - Office Portfolio Rationalisation 600 Building Maintenance 1, ,471-6, Shire Hall Campus ,791-1,150 1, ,755-11,426 - Strategic Assets 100 Local Plans Representations 300 County Farms ,820 - Investment - Renewable Energy ,994 (87) Soham 100 MAC Joint Highways ,198 - Project 1,919 Community Hubs - 1,919-1,919-1,950 - East Barnwell - Shire Hall Relocation ,606-3,330 St Ives Smart Energy 3,330-3,330-3,645 (60) Grid - Other Committed Projects 5,749 5, ,928-42,831 (147) 53 Capitalisation of Interest (2,764) Capital Programme (16,737) - (16,737) - (19,903) - Variations 123,274 TOTAL 193, , ,847 (147) 12

13 2. Previously Reported Amendments Capital Expenditure s Capital Scheme Original Housing 43, ,376 This reflects the roll forward of 83m underspends from 2017/18 into. It is expected that further rephasing over the remainder of the scheme will be included within the August 18 report. Shire Hall Campus In July C&I Committee approved carry forward of 261k funding from 2017/18 into, being required to support the general building maintenance programme. In addition to the carry forward of funds, C&I Committee was asked to approve the virement of 711k from Shire Hall Maintenance budget to the Countywide Building Maintenance budget, comprising the 261k roll forward, plus a further 450k of the budget. This decision was postponed - see Building Maintenance below for further details. Building Maintenance 600 1,471 The budget comprises 160k carry forward 160k from 2017/18 into, funding a schedule of works to maintain County Office premises to compliance standards that will not interrupt delivery of Council services. In addition to the carry forward of funds, the July 2017 C&I Committee was asked to approve a virement of 711k from the Shire Hall Maintenance budget to the Countywide Building Maintenance budget, as outlined above. This funding is required to maintain County Office premises to compliance standards that will not interrupt the delivery of Council services. This contributes to all the Council s strategic outcomes, and will assist the Shire Hall 2020 Hub and Spokes project to provide compliant and fit-for-purpose premises to remain as spokes and reduce expenditure on premises identified for disposal. The Committee s decision was postponed awaiting further information to be provided in the July Finance & Performance Report (to be discussed in September committee). County Farms Investment C&I Committee approved carry forward of 62k funding from 2017/18 into, to fund ongoing planned works. Renewable Energy - Soham

14 Capital Scheme Original The budget comprises the carry forward of 117k funding from 2017/18 into to fund the retention costs for the Solar Park, which are now due to be paid in. Office Rationalisation Carry forward of 184k funding from 2017/18 into was approved, for work on office rationalisation, moves and co-location projects - including Sawtry, Hill Rise, Shire Hall, Hereward Hall, Buttsgrove, Scott House/Stanton House and Meadows closure. 3. Previously Reported Amendments - Total Scheme Expenditure s None reported. Capital Scheme Total Scheme Original Total Scheme 4. Previously Reported Exceptions Capital Expenditure None reported. Capital Scheme Current Variance - 14

15 C&I APPENDIX 7 Capital Funding 1. Capital Funding Summary Original Funding Allocation as per BP Commercial and Investment Capital Programme Funding for Spend Variance Source of Funding 78,833 Capital Receipts 78,833 78,833-1,759 Grant Funding 1,759 1, Developer Contributions ,422 Prudential Borrowing 112, , ,274 TOTAL 193, , Previously Reported Amendments Capital Funding s Capital Scheme Original Housing 43, ,376 As reported above, this reflects the roll forward of 83m underspends from 2017/18 into. It is expected that further rephasing over the remainder of the scheme will be included within the August 18 report. Shire Hall Campus As reported above, carry forward of 261k funding from 2017/18 into, being required to support the general building maintenance programme. In addition to the carry forward of funds, Commercial and Investment Committee in July was asked to approve the virement of 711k from Shire Hall Campus to the Countywide Building Maintenance budget. The Committee s decision was postponed awaiting further information to be provided in the July Finance & Performance Report (to be discussed in September committee). Building Maintenance 600 1,471 15

16 Capital Scheme Original As reported above, carry forward of 160k from 2017/18 into, funding a schedule of works to maintain County Office premises to compliance standards that will not interrupt delivery of Council services. In addition to the carry forward of funds, Commercial and Investment Committee in July was asked to approve the virement of 711k from Shire Hall Campus to the Countywide Building Maintenance budget. The Committee s decision was postponed awaiting further information to be provided in the July Finance & Performance Report (to be discussed in September committee). County Farms Investment As reported above, carry forward of 62k funding from 2017/18 into, to fund ongoing planned works. Renewable Energy - Soham As reported above, carry forward of 117k funding from 2017/18 into to fund the retention costs for the Solar Park, which are now due to be paid in. Office Rationalisation As reported above, carry forward of 184k funding from 2017/18 into, for work on office rationalisation, moves and co-location projects. 3. Previously Reported Amendments - Total Scheme Funding s None reported. Capital Scheme Total Scheme Original Total Scheme 4. Previously Reported Exceptions Capital Funding None reported. Capital Scheme Current Variance - 16

17 17